In this talk by Chris Guillebeau, Author of The $100 Startup, Side Hustle, and more learn how to add to your small business' revenue stream. Chris shares five ways and several real-life examples of how small business owners have increased their income in this keynote talk for the Amazon Business Small Business Summit.
Below is a summary of the video transcript from the 5 Ways to Increase Income as a Small Business presentation that includes case studies from the Side Hustle School podcast hosted by Chris. He explains that the triangle of business income includes customers, sales, and margins. Increasing any one of these will give you an immediate bump in income. Below are five ways to influence the triangle.
The goal is to duplicate your success by reaching new customers.
In this story, a Washington State government administrator had a father with Alzheimer's. He wrote 200 questions and recorded his dad's answers. He turned those questions into a book that he self-published through Amazon's Kindle Direct Publishing platform. This self-published book did really well.
In the first few months after publication, the book earned more than $20,000 a month. So he thought,, "Okay, what would be the logical extension to a book that's titled 'Dad, I Want to Hear Your Story'?" He went on, in fact, to create other versions of the book for moms and for grandparents, and eventually a generic version. This was very easy to do because most of the questions were the same. In doing so, he was able to reach a lot more people.
The author made almost $400,000 in 2020 when he started this project. It's a little bit less than that now, but it's still a multiple six figure business for something that he's doing on the side.
So, one tip here, don't just add infinite variations like color choices to an existing product. You might think, "Well, I've got something I sell. I'm just going to put it in a bunch of different colors or something." That's actually more work for you without bringing in new customers. So, to understand the difference, ask, "Would this attract a different group of buyers?"
Sell the same thing in another channel. In addition to selling through Amazon, he now sells on his own website as well. It could be another third-party platform. Wherever you're selling, is there another channel where you could sell the same thing to reach new customers?
Many things can be sold as a product or a service. So, let's talk about going from one to the other. If you visit a home improvement store, there are lots of different ways you can buy the same thing. If you want bookshelves, you can buy raw materials. You can also buy finished goods. You can buy something in between, like a kit, for example. So, it might seem obvious, but there are many ways to productize a service business or add a service option to a product business.
In this story, a recruiter and corporate coach from the UK spends a lot of time with professional and executive-level job candidates. That's what she does for her day job. She noticed that a lot of these people, even though they are executives and very well-skilled, actually needed help with their resumes. Now her main business is providing high-end coaching. This is not inexpensive. Her service pricing starts at around $700 and goes up from there, which makes sense considering that it’s personalized coaching. But, in addition to that, she went on to create a series of resume templates that you could just download, and she sells these templates passively with no client time and no direct contact needed.
Resume templates allow her to help others at scale and bring in several thousand dollars a month on top of everything else she does. It’s a different type of customer who wants meaningful coaching or consulting, that high-end service, compared to someone who wants a template. So if you're focused on one or the other, consider what it would take to create the different option.
You could also go the other way and create a service from a product business. And in that example, the service will usually be much more expensive than just buying the product. Remember, some customers may want what you offer, but they don't necessarily want it in the same way that you're currently offering it, so consider how you could go from a product to a service or vice versa.
If you have built a business model that works for you, document the process. Go through and write down every step of running the business and then sell this blueprint to others. In some cases, like some of the stories we've seen, the teaching income or the income from selling the owner's manual can actually exceed the income the person earns for the actual business, which is really interesting.
In this story, Dom and Nicole, The Voiceover Couple, do voiceover work for major brands and studios. They work with Nike, Netflix, and lots of other big companies. In their studio work, they focus on brands who are looking for authentic Black accents - African American accents and other accents from the African diaspora. But you can also book an hour-long consultation with either Dom or Nicole for $150. They're trying to help people who want to break into the industry, so they offer tools and resources for them.
The Voiceover Couple receives $4,500 a month from the teaching side of their business, and their goal is to build generational wealth for their family.
A Las Vegas wedding officiant does much the same thing as the Voiceover Couple. Her name is Maria Romano. A few months after the death of her husband, she was looking for a new start, and she decided to get licensed as a wedding officiant. She still conducts weddings, but she also now sells a training course for $177. If you want to learn how that works, you can get her training course. She also has a $477 option that includes personalized coaching. She’s using the owner's manual strategy to offer that product and service.
Teach what you know, and share the roadmap to your current success. And don't be afraid of competition. Don't be afraid of giving away your secrets, because there are a lot of people out there who have the same need.
I hear from small business owners all the time who say things like "I was worried about raising my price. I wanted to raise my prices for months and months, but I was always afraid to. I thought my customers would all abandon me. But I finally did it, and it turned out to be totally fine. Nobody cared, nobody complained. And now I'm making 30% more money." Pretty simple thing to do.
This story is about a therapist who had a high-risk pregnancy. And fortunately, mom and baby were fine. But after the experience, she realized that there should be much more of a support structure for people in that situation. So she set out to create that structure, designing what she calls “personalized concierge level trauma-informed support.” Sounds good, but one early mistake was she charged too little. She thought clients would object to her raising her rates to $5,000. She thought, "This seems like a fair rate to me for what I'm providing, but I'm worried nobody's going to pay it." But in fact, she's doing quite well. She has lots of clients. So, maybe a lesson is, if you raise prices and no one even complains at all, it means you probably could have done so a long time ago. Perhaps the best time to charge more in your e-commerce business is yesterday, but the second-best time is now.
Much more money, zero complaints (or not that many complaints).
Increasing prices is not a lot of work, and if your conversion rate remains the same, now you're getting paid more. I've actually heard from some people who have a situation where they increase the prices, and then the conversion rate actually goes up a little bit, which is kind of like, “wow,” that's the mind-blowing scenario.
So, the lesson there is perhaps to test.
Create recurring revenue and ongoing engagement by packaging your product or service in the form of a subscription. There are so many subscriptions and membership sites out there these days. We could go through and have a whole presentation on this.
A travel writer finds the ticket to a thriving membership site. She's helping families book airfare. She's making $300,000 a year. Now, this is pretty cool for lots of reasons, right? First of all, $300,000 a year. But also, wouldn't it be great to get paid more than once? Well, that's what a membership site or a subscription service will do. And it can actually work for almost any kind of business.
Something fun to do is use a spreadsheet or back of the napkin to run some rough math on what this might look like for you and your business. Calculate based on the number of customers and how much it costs each month. Think, for example, "Okay, if I had X customers, and they're paying this amount a month, what would that look like?" It can be really motivating when you realize the potential.
Recurring revenue is the key thing. With membership sites, the challenge over time, there's a lot of churn. People come in, they leave, you're always trying to fight that. But the good thing is it's very predictable in the sense that if there is a decline, then you're going to have advance warning. So if this woman's business stops working as well, she's going to have some time to work on a new business or try to address whatever the fundamental issue is. That's why recurring revenue is so powerful.
Now, what do these strategies have in common? It's all about increasing income in your small business. But I want you to notice that there are basically three variables or three points of a triangle: customers, sales, and margins. Margin is like your profit margin. If you increase any one of these variables, you're going to have an immediate bump in income without doing anything else.
Here's a tip: over time, you probably want to be working on all of these things. These are good long-term goals, and they are kind of interconnected. But a lot of new business owners have the inclination to always focus on customer acquisition. To say, "How can I get more customers and clients?” And, you know, that's great, but one of the other two variables might be quicker and easier for you. It might be actually a lot easier to have more sales from the existing customer base. Your customers have already trusted you. They have overcome whatever hurdles they had in making a purchase, so they're on your side. What can you do to better serve them? Or how can you increase your profit margin one way or another?
I wanted to give you five ways to increase profit in your small business. But my second secret goal for this presentation is just to cheer you on in your role as a solopreneur or a small business owner. I really think there's no better time to be working on your own and building something, creating your own security. My encouragement to you is to just remember why you got into this in the first place. Why did you start your business? Why did you choose to go down this road? Maybe it was just about money. And if so, that's fine, there’s nothing wrong with that at all. But a lot of people find a connection to something deeper, like freedom, autonomy, the chance to create and build something for yourself, or to be of service to the world while still getting paid, which I think are two pretty great things. So, whatever that is for you, keep it in mind, and return to it if you ever get off track.
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Chris Guillebeau is the New York Times bestselling author The $100 Startup, Side Hustle, The Happiness of Pursuit, and other books. During a lifetime of self-employment that included a four-year commitment as a volunteer executive in West Africa, he visited every country in the world (193 in total) before his 35th birthday.
His daily podcast, Side Hustle School, is downloaded more than two million times a month. He is also the founder of the World Domination Summit, an event for cultural creatives that attracts thousands of attendees to Portland, Oregon every summer.
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